24 February 2006

QPA fights more gain for Gordon from new development tax

The Quarry Products Association (QPA) has responded to the Government's consultation on a proposed Planning Gain Supplement (PGS) with serious concerns about the application of the planned new tax to mineral workings. The consultation, which closes on Monday (27 February), stems from proposals set out in the Barker Review of Housing Supply of spring 2004, and could see the Government tax increases in land values following the award of planning permissions. It has been estimated that the Treasury wants to raise £2 billion pa. to pay for infrastructure demands created by development. In its response to the consultation, the QPA argues that the proposals do not take into account the unique changes that occur to land value during the life of mineral workings and, as such, could unfairly link such operations with residentially developed land.

Although there is an initial uplift in land values when planning permissions are granted for mineral extraction, this is far less than the consultation identifies for other forms of development. Equally important, and unlike residential development, the financial yield from the mineral extraction is spread over the life of the working, perhaps 20 or more years. Furthermore, as minerals are extracted, the value of the land declines, often back to agricultural value.

In its response to the consultation, the QPA identifies the following factors that differentiate mineral workings from the other identified land uses:

• Mineral working is a temporary form of development, unlike built development.
• Minerals workings are restored to beneficial after uses following extraction.
• The financial yield from a mineral permission will be realised over perhaps a 20 year period and thus a tax payable in full at the start of development would be inequitable.
• Minerals developments, unlike other forms of development, do not create significant and long term demands on local infrastructure and services.
• Minerals operators already contribute to local communities through site specific section 106 agreements made with local authorities.

With these factors in mind, the QPA has called for mineral workings to be exempted from the PGS. The clear basis of the PGS proposals to make a gain from housing development and, with land use for mineral extraction being a unique and temporary form of development, it should not be within the scope of the PGS.

QPA Director of Planning, Duncan Pollock, said: "Kate Barker's recommendation to levy for a proportion of land value uplift through the planning process clearly has residential development very much in mind. With the exceptional and unique circumstances that characterise land used for mineral workings, it seems completely unjustified to subject such temporary development to the same kind of taxation. Furthermore, the PGS, if imposed, would be yet another time-consuming and costly regulatory hurdle for the industry to overcome. With new demands for valuation, start notices, stop notices and tax disincentives, this would only delay a system that is already under resourced and creaking".

ENDS

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